121.Whichofthefollowinghasapresentvalueof$100? a.$109.12intwoyearswhentheinterestrateis4percent b.$113.98intwoyearswhentheinterestrateis6percent c.$116.64intwoyearswhentheinterestrateis8percent d.$123.17intwoyearswhentheinterestrateis10percent 122.Youhaveachoiceamongthreeoptions.Option1:receive$900immediately.Option2:receive$1,200oneyearfromnow.Option3:receive$2,000fiveyearsfromnow.Theinterestrateis15percent.Rankthesethreeoptionsfromhighestpresentvaluetolowestpresentvalue. a.Option 1; Option 2; Option 3 b.Option 3; Option 2; Option 1 c.Option 2; Option 3; Option 1 d.Option 3; Option 1; Option 2 123.Supposeyouwinasmalllotteryandyouaregiventhefollowingchoice:Youcan(1)receiveanimmediatepaymentof$10,000or(2)threeannualpayments,eachintheamountof$3,600,withthefirstpaymentcomingoneyearfromnow,thesecondtwoyearsfromnow,andthethirdthreeyearsfromnow.Youwouldchoosetotakethethreeannualpaymentsiftheinterestrateis a.2percent,butnotiftheinterestrateis3percent. b.3percent,butnotiftheinterestrateis4percent. c.4percent,butnotiftheinterestrateis5percent. d.5percent,butnotiftheinterestrateis6percent. 124.AjudgerequiresHarrytomakeapaymenttoSally.ThejudgesaysthatHarrycanpayhereither$10,000todayor$12,000twoyearsfromtoday.Ofthefollowinginterestrates,whichisthehighestoneatwhichHarrywouldbebetteroffpayingthemoneytoday? a.4percent b.6percent c.9percent d.11percent 125.AjudgerequiresHarrytomakeapaymenttoSally.ThejudgesaysthatHarrycanpayhereither$10,000todayor$11,000twoyearsfromtoday.Ofthefollowinginterestrates,whichisthelowestoneatwhichHarrywouldbebetteroffpaying$11,000twoyearsfromtoday? a.2percent b.3percent c.4percent d.5percent 126.Youhaveacontractwithsomeonewhohasagreedtopayyou$20,000infouryears.Sheofferstopayyounowinstead.Forwhichofthefollowinginterestratesandpaymentswouldyoutakethemoneytoday?. a.8percent,$15,000 b.7percent,$16,000 c.6percent,$17,000 d.Alloftheabovearecorrect. 127.Whichofthefollowingiscorrectiftheinterestrateis6percent? a.$215tobereceivedayearfromtodayhasapresentvalueofover$200;$420ayearfromnowhasapresentvalueover$400. b.$215tobereceivedayearfromtodayhasapresentvalueofover$200;$420ayearfromnowhasapresentvalueunder$400. c.$215tobereceivedayearfromtodayhasapresentvalueofunder$200;$420ayearfromnowhasapresentvalueover$400. d.$215tobereceivedayearfromtodayhasapresentvalueofunder$200;$420ayearfromnowhasapresentvalueunder$400. 128.Otherthingsthesame,whentheinterestraterises,thepresentvalueoffuturerevenuesfrominvestment projects a.rises,soinvestmentspendingrises. b.falls,soinvestmentspendingrises. c.rises,soinvestmentspendingfalls. d.falls,soinvestmentspendingfalls. 129.MixsterConcreteCompanyisconsideringbuyinganewcementtruck.Theownersandtheiraccountantsdecidethatthisistheprofitablethingtodo.Beforetheycanbuythetruck,theinterestrateandpriceoftruckschange.Inwhichcasedothesechangesbothmakethemlesslikelytobuythetruck? a.Interestratesriseandtruckpricesrise. b.Interestratesfallandtruckpricesrise. […]

  32) The primary reason why monopolistically competitive firms cannot make an economic profit in the long run is because A) there are barriers to entry. B) there is freedom of entry. C) the antitrust laws prevent profit from increasing. D) recessions occur. E) they collude to make a normal profit. 33) In monopolistic competition, the entry of new firms A) shifts existing firms’ demand […]

  20.1   The Balance of Payments   1) The price of one country’s currency in terms of another country’s currency is the A) balance of trade. B) exchange rate. C) terms of trade. D) currency valuation.   2) The agreements that were reached at the Bretton Woods conference in 1944 established a system A) in which the values of currencies were fixed in terms of […]

  41) As additional units of labor hours are employed, holding all other factors constant, along the production function, A) real GDP increases at an increasing rate. B) nominal GDP decreases at an increasing rate. C) real GDP increases at a decreasing rate. D) real GDP increase at a constant rate. E) real GDP initially decreases and then starts to increase. 42) The idea that […]

  51) According to Geert Hofstede, which of the following is a key cultural dimension that helps account for rapid economic growth in Asia? A) power distance B) individualist/collectivist C) feminine/masculine D) uncertainty avoidance E) long-term orientation 52) Two countries that score high in uncertainty avoidance are: A) Austria and Belgium. B) Japan and Hong Kong. C) Greece and Portugal. D) Denmark and Finland. E) […]

  34) In a competitive market for a private good with no price or quantity regulations, no external cost nor external benefit, low transactions costs, and no taxes or subsidies, A) the allocation of resources is planned by the government. B) production is organized by government organizations. C) efficiency can be attained in the market with no government intervention. D) efficiency is usually be achieved […]

    41) When the U.S. interest rate differential ________, the demand for dollars ________ and the demand curve for dollars shifts rightward. A) rises; decreases B) rises; increases C) falls; increases D) falls; decreases E) rises; does not change   42) If the U.S. interest rate rises relative to the interest rate in other countries, then the supply of dollars ________ and the demand […]

  11) The aggregate quantity of land supplied A) varies depending on its price. B) depends on the buying and selling decisions of individuals. C) is constantly increasing. D) is fixed. E) is perfectly elastic.   12) The market for land A) has an elastic supply. B) has a perfectly inelastic supply. C) determines the equilibrium interest rate. D) has an upward sloping supply curve. […]

    31) For a firm in a perfectly competitive market, price is A) equal to both average revenue and marginal revenue. B) equal to average revenue but greater than marginal revenue. C) greater than marginal revenue but less than average revenue. D) less than both average revenue and marginal revenue. 32) Marginal revenue is A) total revenue divided by the total quantity of output. […]

  51) Which of the following is true? A) For an inferior good, when income increases, the demand curve shifts leftward. B) If the price of a substitute rises, the demand curve shifts leftward. C) If people expect the price of a good will rise in the future, the demand curve shifts leftward. D) An increase in population shifts the demand curve leftward. E) An […]